I ask everyone to turn off all mobile phones and devices or to put them on silent. Before we begin, I will explain some limitations to parliamentary privilege and the practice of the Houses as regards references witnesses may make to other persons in their evidence. Witnesses are protected by absolute privilege in respect of the presentation they make to the committee. This means they have an absolute defence against any defamation action for anything they say at the meeting. However, they are expected not to abuse this privilege and it is my duty in the Chair to ensure this privilege is not abused. Therefore, if their statements are potentially defamatory in relation to an identifiable person or entity, they will be directed to discontinue their remarks. It is imperative that they comply with any such direction.

I advise members of the constitutional requirement that they must be physically present within the confines of the Leinster House complex in order to participate in public meetings. In this regard, I ask any member participating via MS Teams to confirm, prior to making a contribution to the meeting, that he or she is on the grounds of the Leinster House campus. Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against any person or entity by name or in such a way as to make him, her or it identifiable or otherwise engage in speech that might be regarded as damaging to the good name of the person or entity.

Therefore, if their statements are potentially defamatory in relation to an identifiable person or entity, I will direct them to discontinue their remarks. It is imperative they comply with any such direction.

This afternoon's engagement is on the medium-term fiscal and structural plan. I welcome the Tánaiste and Minister for Finance, Deputy Simon Harris, and the Minister for Public Expenditure, Infrastructure, Public Service Reform and Digitalisation, Deputy Jack Chambers. I welcome Mr. John McCarthy, assistant secretary, and Mr. Paul Cotter, principal officer, Department of Finance; and Ms Jessica Lawless, principal officer in expenditure policy, and Ms Niamh Callaghan, principal officer in expenditure policy, Department of Public Expenditure, Infrastructure, Public Service Reform and Digitalisation. The committee welcomes the opportunity to engage with them and I thank them for being here today.

Before proceeding, I also thank officials from the Department of Public Expenditure, Infrastructure, Public Service Reform and Digitalisation for agreeing to accommodate our discussion on accuracy of budget information, budget forecasting and related issues during themeeting.

I invite the Tánaiste and Minister for Finance to make his opening statement.

I thank the Cathaoirleach. I thank the committee for the opportunity to attend today, the first opportunity I have had to attend this committee. I welcome the opportunity to be here along with my colleague the Minister, Deputy Chambers, to discuss Ireland's new medium-term fiscal and structural plan.

It would be odd to start the conversation today without alluding to all that is going in the world and the potential economic impact of that. I want to take the opportunity to briefly address the situation in Iran and the wider Middle East. The number one priority for the Government right now, as you would expect, is the safety of Irish citizens, whether they are living in the region, visiting, or attempting to pass through any of the affected countries. As colleagues know, there are over 20,000 Irish citizens living in the region and there are hundreds more due to travel through one of the major international airports in the area. We are working to make sure the people who want to leave have the opportunity to do so in what is a very difficult, challenging and evolving situation. As a Government, we are continuing to keep in very close contact with our troops in Lebanon. Yesterday, the Taoiseach and I met with the Chief of Staff of the Irish Defence Forces in relation to that as well.

While it is not as urgent as the humanitarian situation and the preservation of life and limb and it is subject to how long the war continues, it is important to say there will be economic implications to this conflict. In the short term, we have seen falls in financial markets around the world. Relatedly, oil and gas prices have risen substantially. While at this point there will be no immediate pass-through to retail prices - that is an important point to make - an ongoing war in the region and the continued closure of the Strait of Hormuz would likely increase inflation and damage economic growth. More generally, this conflict is the latest in a series of geopolitical and geoeconomic events that has the overall impact of heightening uncertainty. We know that heightened uncertainty is bad for economic growth.

In such an uncertain world, it is the Government’s job to ensure that Ireland has the flexibility and resilience needed to continue to prosper. It is in this context that the medium-term plan is so important. The Minister, Deputy Chambers, and I published the plan just before the Christmas break and it was submitted to the European Commission in early January. It has both a European and domestic dimension. First, all member states are required to submit plans under the reformed EU economic governance rules, which place greater emphasis on medium-term planning rather than annual budgets. They represent the cornerstone of the revised European fiscal framework and each member state will be held to account for the achievement, or otherwise, of the targets and ambitions set out in their respective plans. Our plan spans five years and provides a stable, multi-annual fiscal and economic policy horizon.

On the domestic front, there are three important and interlinked elements to the document. There is a fiscal strategy with binding expenditure ceilings, there is an outline of key investment goals and there is detail on structural reform efforts across all sectors. Before discussing these, it is important to outline the international context in which the plan was formulated. We can have no doubt that the world we live in now is different from the one we have been used to in recent years. There has been a shift in US economic policy, the continued competitiveness pressure on European industry from China, the seemingly inexorable rise in the capabilities of artificial intelligence, AI, and the ongoing brutal war of aggression against the people of Ukraine by Russia. These are all evidence of a new geopolitical and geoeconomic paradigm and that is before the events of the past three or four days.

As an independent, ambitious and outward facing country, we must respond. We can look back at the past three decades of economic progress with pride. This country has come a long way and Irish people today have more opportunities than in previous generations. However, looking back will not help us move forward in a world that is less familiar, more competitive and deeply uncertain. The medium-term plan is a core facet of this response. The new plan will support progress on implementing the key social and economic priorities of Government while ensuring we do so against a backdrop of sustainable public finances. It aims to provide clarity and certainty to citizens, businesses and investors on the priorities of this country as well as, where appropriate, the public resources that will fund them. In particular, the plan commits the Government to a fiscal strategy that is based on three core pillars; sustainability, resilience and readiness.

First, we will continue to increase expenditure in public services but in a sustainable way. We will not fund expenditure today on the backs of tomorrow’s tax payers. Second, we are providing for the large-scale infrastructure investment planned as part of the NDP. Crucially, we are committing to continuing investment in strategic infrastructure projects even in the event of an economic slowdown or deterioration of our public finances. Our commitment in this regard shows, I hope, that we are serious about long-term economic planning. Third, and relatedly, we will continue to save for the future by running surpluses and putting money into both the Future Ireland Fund and Infrastructure, Climate and Nature Fund.

The plan shows that we are committed to using the resources of the State to improve people’s lives in a sustainable way but the plan also makes it clear that money alone will not solve all challenges. The plan sets out a series sectoral reforms and initiatives that will improve public services. In relation to infrastructure, I cannot stress enough the importance of the reforms and improvements set out in the recent Accelerating Infrastructure report and action plan. I commend and thank my colleague the Minister, Deputy Chambers, for his work on this. Put simply, we will not be able to boost our competitiveness, improve our living standards or meet the challenges ahead without the success of this plan. Irish citizens deserve and expect that their Government delivers for them. That is what we intend to do.

In summary, Ireland and Europe face a number of different but related challenges. As a country, we cannot sit back and wait for the consequences of these issues to affect us. We must be strategic in our thinking, flexible in our response and speedy in our delivery. This medium-term plan sets out the framework within which these responses can take shape. It provides fiscal and policy certainly in a very uncertain world and can act as an enabler of the growth and dynamism we will need to meet these challenges. I look forward to the chance to discuss this plan.

I thank the Cathaoirleach and members of the committee. I am pleased to be here with the Tánaiste and Minister for Finance today to discuss the medium-term fiscal and structural plan and budget 2026.

The medium-term fiscal and structural plan will guide our approach to fiscal policy out to 2030, as the Tánaiste said, to support our country’s strategic objectives and ensure that the State’s resources improve people's lives in a sustainable way. Voted expenditure is projected to increase at an average rate of 6% over the 2026 to 2030 period from €117.8 billion this year to €147.3 billion in 2030. This is a moderation in growth compared to the 9% observed over the period 2019 to 2024. However, it represents significant investment to the end of the decade to support public service delivery. Taking a wider, multi-annual view will complement and guide the annual budget cycle, enabling us to anticipate and prioritise effectively for the challenges and opportunities ahead. The annual budget, however, will still be where decisions on key sectoral policies are made and budgetary allocations agreed.

The medium-term expenditure strategy is focused on the prioritisation of infrastructural and capital spending, as the Tánaiste said, with ceilings agreed as part of the national development plan review last year to support investment in critical infrastructure in areas such as electricity, water and transport and to support housing delivery. It is also focused on a moderation in the growth of current expenditure and the inclusion of contingency funding to provide flexibility. Detailed analysis was undertaken to support critical decisions on funding levels for both current and capital expenditure over the medium-term. I want to highlight two key documents. The national development plan review, published in July, was underpinned by analysis of key drivers of infrastructure needs and an assessment of sectoral requirements.

To inform bottom-up considerations, my Department developed a medium-term expenditure framework, a multi-year public expenditure planning exercise. The framework was developed using a whole of budget approach, which places a strong emphasis on the totality of expenditure, linking investment to improved outcomes and prioritising value for money. The policy driven sectoral approach to the assessment of public expenditure in the framework enables a greater focus on the totality of expenditure across critical areas, such as health, social protection and the public sector workforce, delivering key services for our growing population over the medium-term.

As I mentioned earlier, the annual budget is the key process through which funding decisions on key sectoral policies are made.

Budget 2026, the Government's first budget, set out a gross total voted expenditure ceiling of €117.8 billion. This reflects an increase of €8.4 billion, or 7.7%, on 2025 expenditure, a significant uplift to support the delivery of programme for Government commitments. Budget 2026 provides for total capital spending of €19.1 billion in 2026, a record level of investment that is being directed towards critical infrastructure delivery. We also provided for a significant increase in the level of current expenditure, which will increase to €97.7 billion this year. This funding will allow the Government to cater for increased demand in existing service delivery and to accommodate the progression of key Government priorities across areas such as healthcare, social protection and pay and staffing levels in the public sector.

Budget 2026 achieved a number of key aims. It better reflected the totality of Government expenditure, representing the significant investment of both current and capital expenditure being made across Government. We placed a stronger emphasis on where funding is being invested and what services and outputs are being delivered. For instance, the allocation for social protection will provide for growth in the number of beneficiaries of weekly social protection payments to 790,000 pensioners and more than 450,000 people who are recipients of illness, disability and care-related schemes. It highlighted the need for Departments to implement reforms and prioritise value for money across government. For example, a number of reforms are outlined that will improve efficiency and drive productivity in the health sector. This shift in focus is important to ensure that investment is driving improved outcomes for our people and, critically, that services can be delivered efficiently and sustainably within the budgets provided to Departments.

The Government’s commitment to investment in public services and infrastructure is being matched by a focus on delivery and implementation. That is why Departments are asked to adhere to the ceilings set out in both the medium-term plan and the budget allocations. This will require firm expenditure discipline, robust internal oversight and risk management arrangements, and the avoidance of in-year policy decisions that create additional cost pressures. This year, Departments are also required to demonstrate how spending translates into service delivery and to manage funding across key policy areas in order that it can deliver the greatest impact for citizens. Enhanced value for money must be at the heart of every decision we make. Securing value for money is the responsibility of us all.

The revised medium-term fiscal and structural plan, which the Tánaiste referred to and which is being advanced across government, is designed to ensure a fairer, better and more resilient future. Alongside this medium-term approach, budget 2026 provides the foundations for our future through increased investment in strategic capital infrastructure and public services in a way that is sustainable and promotes the efficient management of public expenditure. I look forward to engaging with the committee and to discussing how we can collectively ensure that both the medium-term plan and budget 2026 deliver for everyone we represent.

I thank both Ministers for coming before our committee. I just have a few questions to ask within the time I have. The plan sets out an average annual net expenditure growth of approximately 6% out to 2030, with total expenditure to exceed €147 billion by that time. Will the Tánaiste elaborate on the macroeconomic assumptions underpinning this trajectory and how sensitive these predictions are to low growth or weaker tax receipts, particularly in light of the current instability globally and in the Middle East to which he referred?

The Minister, Deputy Chambers, may wish to come in on this as well. Going to the nub of the Deputy's question around the Middle East, Iran and where we are at, my Department will carry out a full macroeconomic analysis of the economic outlook on foot of the developments we have seen over the course of the past four days or so and the impact that these may have in the time ahead. As the Deputy will know, we are due to publish a spring forecast by the end of the month. Perhaps the timing has worked out. We will be using the time between now and the end of the month to assess the economic impact of the developments we have seen in recent days. A lot is not yet clear, but what is clear is that the headwinds in terms of the global economy were already significant. There was already significant uncertainty. The actions of the last number of days have only added to that uncertainty. We know that inflation is sensitive to commodity prices. That is something we need to monitor carefully. We will be reporting on that in the spring statement.

More positively, despite all the headwinds, the Irish economy is in a relatively good position. We are approaching a time of challenge from a position of relative strength in terms of running budget surpluses, the number of people in employment and the money in our long-term funds. I am pleased that the assumptions underpinning this plan have been endorsed by IFAC. The plan has now been endorsed by the European Commission. I hope and expect the plan will be adopted at the ECOFIN meeting of European finance ministers next Tuesday.

When it comes to the significant uplift in capital expenditure, I do not think we have a choice. As the Tánaiste said, protecting that capital investment and providing certainty in the medium to long term is critical to building growth and prosperity out to 2030. As we know, investment decisions are being made that align with some of the infrastructure we have to deliver from a capital perspective. In recent years, through a significant inflationary cycle, the war in Ukraine and the Covid pandemic, we have shown that there is huge resilience in the Irish economy. In order to future-proof that, we have to invest in infrastructure and do things more quickly in that context, while being careful about decisions on new current expenditure.

On the moderation in the rate of growth in current expenditure from 2027 onwards, what kind of policy measures or control mechanisms will be put in place to deliver deceleration from that point onwards? How do we ensure that the quality of service we provide will be maintained?

That is why, in budget 2026, we changed our approach with regard to examining the total expenditure allocation across Departments. We have looked more at the total quantum of expenditure in the context of efficiencies and outputs and the agreements and settlements we make with colleagues with regard to future spending decisions. In previous years, existing levels of spending or service were essentially allocated and agreed and the bilateral discussion focused on what new allocations would be given. In many ways, we did not delve into the need for greater efficiencies or improving outputs in the context of the existing level of spend. That is important. In addition, seeking to reduce the number of in-year policy decisions mitigates the risk of expansion in overall spending. We did not take as many new policy decisions in budget 2026 to moderate the growth of overall spending this year. That will continue next year in the context of what is available. It is still a significant budgetary package, with growth in excess of €8 billion. It has allowed for continued expansion of public services, with priority given to front-line delivery in education, health and other areas. It has also allowed for important interventions in respect of child poverty, carers and social protection. The medium-term expenditure framework sets out the wider choices and trade-offs as regards what moderation looks like. We have landed near the middle of the three different expenditure trajectories set out in that particular document.

I have a final question. The Tánaiste mentioned the ECOFIN meeting that is due to take place. The medium-term fiscal and structural plan will be formally adopted at this month's meeting. Will he outline to the committee what the key messages from Ireland will be with regard to our expenditure path, our structural reform commitments and our sustainability?

I have been making the point to colleagues that this plan is built around the idea that we will continue to build up our financial buffers. While our economy is in a position of relative strength, we must continue to run budget surpluses and to set money aside in long-term funds. It is crucial that Ireland invests the significant resources currently at our disposal in our infrastructure. I have been making the point to colleagues that there is a recognition in Ireland that there is a deficit of around 25% in our physical capital relative to other European countries. The work being led by the Minister, Deputy Chambers, through the NDP and accelerating infrastructure delivery is crucial in that regard. We will be reporting an economy that is in a position of relative strength in which more people are in employment than ever before.

However, members should also be clear that we intend to moderate the increase of our expenditure over the course of the plan and we are positively discriminating in favour of capital investment, because that is investment in our future and in public assets.

I thank the Tánaiste for coming. He mentioned something a few minutes ago and at Leaders' Questions earlier Deputy McDonald and the leader of the Labour Party brought it up. The Taoiseach, as leader of the country, was shockingly weak. He did not mention America or Israel. He spent his whole time blaming Iran for the conflict in the Middle East.

How will we deal with the price gouging going on at the pumps? I know someone who priced a fill of home heating oil yesterday and it was €150 or €160 more than it was last week and, obviously, the company had not paid more for this oil. Therefore, my first question is about price gouging at the pumps and ripping off the Irish people.

First, I commend the Taoiseach on the work he is doing as Head of Government at a time of significant geopolitical uncertainty. His priority, my priority and that of all the Government is, in the first instance, Irish citizens. Our job, and the most important job the Irish Government has, is ensuring the welfare and well-being of our people and there are over 20,000 Irish people in the region right now, including people who live there and have done so for years, people who are on holidays or are transiting through, and worried and anxious people. The work of the Government and the Minister, Deputy McEntee, is focused on trying to get people safely back, keep people safe and give them the most up-to-date information.

Second, and as important, is supporting our troops, because this is a part of the world in which we have hundreds of Irish people serving with distinction as part of UNIFIL in Lebanon. Yesterday, the Taoiseach, the Minister, Deputy McEntee, and I met the Chief of Staff of the Defence Forces.

Third, we continue to call for de-escalation. I heard the Taoiseach's comments earlier today and I agree with them, that Ireland supports multilateralism and the work of the United Nations. However, the priorities I just outlined have to be our immediate priorities.

I genuinely appreciate Deputy Guirke bringing up the issue of price gouging because what he said is entirely correct. I am clear that the situation right now in the gulf in the Middle East could have an adverse impact on inflation and could, in the time ahead, have an adverse impact on oil and gas prices. That is true. However, it is also true that there is not an immediate pass-on of that. As the Deputy rightly said, the way the world works is that companies and others will have purchased that oil at an agreed price many weeks or even months ago. To see a situation - I have seen examples and the Deputy probably has seen them in his constituency - where people are getting text messages saying a fill of oil would have cost one price yesterday and will cost another tomorrow or next week is price gouging. One can blame Iran or any other part of the world for any other issue. That is not what is going on. This is price gouging. I do not want to use up the Deputy's time, but yesterday we met the Competition and Consumer Protection Commission, CCPC, the consumer protection watchdog. It has significant enforcement powers and the Minister, Deputy Peter Burke, intends to engage with the CCPC on that because there are legitimate issues around energy costs in Ireland, but we cannot tolerate price gouging.

At the same time, people have to have a bit of courage and whether they are going to America next week or not, they have to be able to call out these people and the Taoiseach did not do that. That is a weak leader and it is very disappointing, but I will move on.

Disabled people will say that in budget 2026, the Government left them €1,400 worse off. At the moment, 450,000 people are in energy poverty. Are there any plans for an energy credit or package for people with disabilities? The Social Democrats tabled a motion on energy credits, as did Sinn Féin, and nothing has happened yet.

We advanced a significant social protection package of approximately €2 billion worth of measures. Within that, there was an expansion of the fuel allowance and the eligibility for it and we took a number of measures across the disability sector. In addition to the interventions made on social protection and increases in core social protection payments, we are seeking to expand services for people with disabilities, which is part of the overall Government strategy on disability. In this budget, we moved away from one-off, temporary measures to measures that are sustainable, permanent and affordable. That was the context in which we agreed the overall budgetary parameters and the package that is there. If the Deputy looks at the distributional analysis of the respective income deciles, he will see the lowest two income deciles were most supported in the context of the simulating welfare, income tax, childcare and health, SWITCH, policies analysis, which was undertaken by the ESRI, and it reflected the income distribution of the measures we advanced. That is the context in which the overall budgetary package and parameters of it can be looked at. There was a significant social protection package, which will make a difference for many households.

The Tánaiste spoke about investment in infrastructure. In my county, Meath, in 2014 I was elected to the local authority on the issue of the state of the roads and I have to say they are in a shambles. They are a total and utter disgrace, especially in the north of the county. This has been going on for as long as I remember and there are times I just feel like giving up. It is because of a lack of Government funding and the local authority not prioritising it. It is both. There is no point in blaming one or the other. The Government should be targeting such areas that are the worst in certain counties, because if it does not do so, it will have others looking for funding for their areas and they can move it around that way. However,the Government needs to target the worst roads in the county and invest more money in them.

Second, the rural regeneration and development fund, RRDF, funding was announced last Friday. In the last round there was €164 million. This time there is €60 million, as far as I know. That is a drop of €100 million. Perhaps I am wrong about the drop being €100 million and I hope I am. The last time, the then Minister's constituency, Cavan-Monaghan, got €32 million, while my constituency in Meath got nothing. If that happened, there would be nothing for anyone else in this RRDF funding. I hope I have those figures wrong. I only had a glance at them today.

The Minister, Deputy Darragh O'Brien, has received a significant upward trajectory of capital funding from 2026 to 2030. It is an overall allocation of €24 billion and he has set out an improved allocation for roads. He is trying to advance a lot of the national roads programme, in addition to regional and local roads, which are an issue in the north east, including in Meath, Monaghan, Cavan and other counties. Local authorities are working on that with the Department of Transport but I do not have a specific breakdown for Meath, except to say that the capital allocation for transport will only increase in the coming years and the Minister is working to ensure we have an appropriate mix of national, local and regional roads.

There has been a 1% increase in Meath.

The distribution is worked through by the Department of Transport. There is a particular formula it uses for counties. However, factually, the capital allocation is significantly increasing for transport. That is also to advance many of the public transport objectives we have for capital expenditure overall.

On the RRDF, I will have to check the exact breakdown. I do not have it here, but we will come back to the committee on it. I am sure there is an explanation, because similarly, the Minister, Deputy Calleary, has received an improved allocation in his capital trajectory for the next five years for community and rural development. We will have to check the specific allocation of that for this year and we will revert to the committee with it.

The Tánaiste and the Minister are welcome, as are their colleagues from their respective Departments. My question for the Minister, Deputy Chambers, relates to the €1 billion contingency allocated in the last budget. Will he apprise the committee of why he settled on a figure of €1 billion and not €1.5 billion or €2 billion?

There is an assessment of the importance of having contingency in medium-term fiscal planning. The International Monetary Fund, IMF, and others recommend that. In the medium-term fiscal and structural plan, the €1 billion is captured in the overall net spending rule. Managing the expenditure dimension of the medium-term fiscal and structural plan, we settled on €1 billion and that €1 billion gives relative headroom in the context of a significant core expenditure increase from year to year of over €8 billion.

An additional €1 billion is built in each year according to the medium-term fiscal and structural plan.

Is it the intention to carry that over each year? For example, at the end of the period covered by the medium-term plan, there could be €5 billion to €6 billion in contingency. Does the Minister intend to increase it or will it be a linear €1 billion every year?

It is an additional-----

It is an additional €1 billion every year. By the end of the period, if the contingency carries, it will be a total amount of €5 billion by way of a contingency, but it is €1 billion each year.

The Tánaiste indicated that the spring forecast was in preparation. Nobody can anticipate where the events in the Middle East are going to take us and the impact that is going to have on citizens, businesses and our economy more generally over the next period. We will have a better read on what the impact of that is. Obviously, our first and principal concern is the safety of Irish residents, but also a de-escalation in Iran and respect for international law in terms of the conduct of this matter. It will be a while before we are clear on what the feed-through is but I am assuming that the €1 billion contingency each year is designed to, as the Minister said, potentially allow some space and headroom to respond to issues like the kinds we may encounter over the next period when inflation rises and people on low and middle incomes are finding it very difficult to make ends meet. Is the Government leaving the prospect open, when the spring forecast is published, of some further financial interventions outside of the normal budgetary parameters and normal budgetary process this year?

That is not our plan as of now. The Deputy's analysis of the situation is very fair in the sense that it is far too early to be able to tell the economic impact, given that this is a crisis. It an horrific conflict. From an economic point of view, it is a crisis that has started and is about four days in now. The duration of the crisis and conflict will have a real impact on the scale of the economic challenge it could present. I was looking at some figures earlier. If we look at spot prices in terms of oil, it has increased from about $72 per barrel on Friday to $84 today. How long does that go on for and where does that stop? Similarly, we have seen that natural gas prices have roughly doubled since Friday. The UK had to carry out its spring forecast today. I am pleased that we have a couple of weeks until ours is due. However, the UK has taken a decision to downgrade its growth rates as well. I do not mean this to be smart, but I would rather be in the position we are in approaching this period of challenge than our near neighbours.

Our job here in the spring forecast is to provide an accurate assessment of where we think things are going. That is what officials will do in my Department, and we will publish that. Then, the plan is to prepare for the next budget, which is scheduled to be delivered probably in early October.

The Ministers and their officials will have heard me speak ad nauseam over the years about the question of existing levels of service, ELS, how we calculate those, how we arrive at a figure that is transparently known and how to be clear on what the formula is. I appreciate the engagement that was offered by the Minister with his officials in recent weeks to get a better sense of how the Department is approaching this. I made this point publicly over that period. It is a question of betting a better handle on that. It keeps the Opposition honest as well in terms of what we are trying to bring forward with clear, costed proposals and how they fit in the overall prospective budgetary landscape. Having more clarity is welcome. It would introduce more responsible and realistic budgeting into the system. We have seen over far too many years - I understand why this was the case in response to Covid and the initial outbreak of war on the continent of Europe - that the State has needed to bring a big sum of money to address the problems. There were routinely Supplementary Estimates every year and additional spending requirements, and that was understood. It is now a feature of the system, though. The Tánaiste said very clearly in the media in recent weeks that the new expenditure ceilings or net spending ceilings would be binding. What does he mean by that? Does he mean he is going to legislate for a net spending rule? What is his interpretation of "binding"? How is he going to hold individual Ministers responsible in terms of their annual Estimate?

Some of that is for the Minister, Deputy Chambers, but to give my view on the broader point the Deputy made in relation to the plan, it is binding in the sense that we have to submit the plan to the Commission. We have to receive Commission approval and endorsement, which we have now received. It has to be endorsed then by ECOFIN. Therefore, it is a binding plan. In fact, we can only submit a new plan if we have a general election or change of Government. We are not intending to do that any time soon.

Are the departmental ceilings binding?

Yes. We have been very clear. This is genuinely a new way of budgeting. I take the Deputy's point on the Opposition in the good faith it was made. This should be seen as an opportunity for all of us - Ministers, Departments, those charged with the delivery of public services and the Opposition in bringing forward its policy proposals - to plan better and actually have a sense of where we believe the levels of spending can get to and what forecasts are underpinning them over the next number of years. Read alongside the longer term horizon of Future Forty in terms of the demographic challenges and so forth, that enables us to have better informed discussions. That is what I meant by "binding".

We had this debate a number of times. The issue with ELS is that, essentially, it takes embedded inefficiencies as a given and adds something marginal to them. On existing levels of spend or service, we can clearly reform structures, organisations or outputs to improve that in the context of what the marginal trade-off should be around a new expenditure allocation. That is what we have sought to do in a transparent way. I know it is a different presentational approach but it has as much detail underpinning it. It is just presented differently. There could be a particular Department of agency that presents a lot of detail and others that present it differently. That is why we have sought to promote this in the context of reform and efficiency, but also to publicly debate trade-offs and choices that are there around new expenditure, which maybe does not get the same level of discussion across Departments. We are very clear in our wider approach to government and a reform of public financial procedures of improved fiscal discipline. That is something we are advancing through budget 2026 as well.

Ar dtús, ba mhaith liom ceist a chur ar an Tánaiste. Cuirim fáilte roimhe chuig an gcoiste. In the context of the Middle East crisis, the Tánaiste spoke about how very serious a situation it was and the potential increases in the cost of living due to a gas and oil crisis. Are energy credits or targeted energy credits going to be given consideration?

Go raibh maith agat, an Teachta O'Callaghan. At the moment, we are very much in the phase of monitoring what is happening. I do not just mean that in a passive way. I mean monitoring a number of issues from an economic perspective. I have outlined what they are: commodity prices, potential shocks to financial markets and, indeed, the impact of what we call the uncertainty channel and the fact that this uncertainty now gets levelled on top of the uncertainty that already existed in the area of tariffs and so forth. The longer the conflict goes on for, the more significant the economic impact will be. In relation to oil and gas prices, and as I said to colleagues, we have seen a significant increase in recent days. We should not see an immediate passing on of those to consumers, although I am concerned that we are, by the way, which cannot be blamed on Iran or anything else happening in the Gulf or the wider Middle East. We need to be vigilant of price gouging. The Government will continue to monitor the situation. This is not a challenge unique to Ireland, however. This will be a challenge that Europe will have to consider together as well. We are very much at an early stage of this, given that it is four days in.

In relation to the medium-term plan, this conflict has added to the amount of uncertainty there already was even before the events of the last few days. Over the last month or so, the Government had been making a number of commitments in terms of savings and investment accounts and about how it was going to have measures in the budget. Has the Tánaiste costed those measures? Does he know what sort of impact they will make? Does he think that, given the level of uncertainty that is there, people could ask whether it was irresponsible to announce measures that were going to cost? There is going to be a cost to these so far out from the budget. What is his view as the Minister of Finance?

Other Ministers might make commitments such as this, which have spending implications. Is the Tánaiste inviting them to do that because that is what he has been doing over the past month? What is his view on that and how it impacts our ability as a country to do medium-term fiscal planning? The Tánaiste has been putting extra pressure on the fiscal process over the past month with his announcements about tax relief on savings. Is he not concerned that might have a ripple effect with other Ministers?

I have been listening to some suggestions made by members of the Deputy's party that were not a million miles away from some of the suggestions I have been making. Leaving that point aside, the comments I have been making are grounded in last year's budget day speech by the then Minister for Finance where there was a clear commitment that the Minister for Finance - and at the time I was not expecting to be in that role - would move ahead on a retail investment roadmap. This is part of the work being done at a European level through the Savings and Investments Union. That is something we committed to doing. I reassure the committee that what I am doing now is what we promised to do on budget day, which is to publish a roadmap in advance of the next budget. Specific policy decisions around the elements of that will be made on budget day, as will be the case in respect of the costings. The next step will be a forum on it and I genuinely welcome engagement across the Oireachtas on this. The scale of any proposals and the costings will depend on the specific model we choose.

We are looking at what is being done in Sweden, Canada and the UK. The budget day speech last year committed specifically to a retail investment roadmap and a forum and engagement with stakeholders.

At this point, there are no costings. There is no impact analysis of the policy or anything like that.

No, but there will be well in advance of budget day. The commitment in the budget was to publish a roadmap, and we will be doing that, and to have a forum, and we will be doing that. We will then be moving towards, in the normal budgetary process, developing plans. I do not think this is a question of whether we can afford to do it. The question for households is whether we can afford not to do it. We have so much money sitting on deposit and earning nothing. It is having a real impact on people's economic well-being.

What is the specific policy objective or goal of the initiative? I am seeking clarity around that.

My starting point at a high level is to ensure that people - whatever we wish to term them; everyday workers or middle Ireland, call them what you will - are not locked out of investment opportunities in Ireland, which they are now. In many ways, you can only invest successfully in this country if you have significant wealth. Everybody else is left putting their money on deposit. Those are deposits in bank accounts and credit union accounts. There is approximately €170 billion on deposit, earning nothing. The whole idea of the Savings and Investment Union, at a European level, and the savings and investment accounts that flow from that, is to open up investment opportunities.

The following is the final point I will make on this issue because I do not want to eat into the Deputy's time. We have one of the highest rates of savings in the European Union and one of the lowest levels of participation in the capital markets. That does not seem right. It is to try to address that imbalance.

I will turn to the Minister, Deputy Chambers. He recently signed off on the pension increase for retired An Post workers. That was welcome. Retired CIÉ workers have been waiting 18 years for a pension increase. The Taoiseach told me last week that it is imminent. Is there any update on that?

The process is ongoing in my Department. The actuarial division of the pensions section is working on that with the Department of Transport. I do not have a specific timeline. Many CIÉ workers in my own constituency were in touch with me. There is a process that underpins the overall assessment and the recommendation from the Department of Transport that will be agreed, but we are not there yet. I will obviously sign off on it when the recommendation is made to me.

Will the Minister explain how it takes so long? Eighteen years is an incredibly long time to be waiting for an increase.

It is managed-----

There have been huge cost-of-living pressures. As the Minister knows, there is enormous frustration around this. Perhaps the Minister would explain.

The Department of Transport manages the process with CIÉ. There are the pension trustees. The corporate division of the Department of Transport does a wider assessment in the context of agreed pension policy with semi-State companies. When there is an agreed framework around an increase, that comes into the actuarial team in the pensions division of my Department. They then assess the sustainability of that particular increase in the context of the scheme itself. They do a wider and more detailed analysis, which then underpins a recommendation to me. That process has yet to conclude. I am as keen as anyone to ensure it progresses, but it has to progress in the context of being sustainable and in line with broader pension decisions that are made with commercial semi-State bodies.

This was all agreed last May. For it to take until March, which is almost a year later, for a final checking seems to make it a very long process.

I think there may have been recommendations made and they go into the Department of Transport. I think it is more complex than that, to be fair to everyone involved. People know the time sensitivity involved. Whenever a recommendation is made to me to allow for a particular increase, we will consent to it quickly. There will be no delay on my behalf. It is important that decisions made on pension increases are done in accordance with pension policy and what is agreed across commercial semi-State bodies around the sustainability of a particular scheme.

I welcome the Airí and thank them for the update on the strategy. My first question arises from their opening statements and the remarks they have made subsequently. The net spending limit will be binding once approved. I hear what the Tánaiste and Minister for Finance is saying about ECOFIN's final sign-off. It is a four- to five-year strategy. The Tánaiste made remarks about the current crisis in the Gulf region. The strategy is to be locked in for four to five years and would require a change of Government or some other rationale for it to be changed. In that period of time, there may be massive economic shocks, as we have seen in the past 48 hours. We do not know how long this particular crisis is going to last or the impact it will have domestically, internationally and across Europe. Is there a safety valve, as it were, for this strategy from a European perspective to try to deal with that? Is it a straitjacket, as it is being presented?

I thank the Deputy. The first thing I want to do, as I know he does, is to reassure people that while we are in a very volatile situation in terms of the global economy and the conflict that is under way, the Irish economy is approaching this moment of challenge from a position of relative strength. Having said that, the direct answer to the Deputy's question is that yes, there are two ways in which a plan can be deviated from. In fact, there are three, including an election and a change of Government, but we can park that one. There are two others. There is the general escape clause. It is similar to clauses in previous EU fiscal frameworks. It is to allow for a deviation from the net expenditure path in the event of a severe economic downturn in the euro area or in the Union as a whole. That is the EU-wide one. There is also a national escape clause. This is a country-specific clause that allows a member state to deviate where there are exceptional circumstances outside the control of the member state. Both of those mechanisms are built into the framework.

I thank the Tánaiste. That is reassuring in the context of the strategy.

I read in one of the briefing documents that Ireland is unlikely to come under much scrutiny under the EU fiscal rules as GDP continues to form the basis of the Commission's debt ratio assessments, despite its being an inappropriate measure for our economy. The Tánaiste alluded to that in his own remarks and to what one might call our over-reliance on corporation tax receipts from a certain few companies in particular. There were eight considerations for the strategy. One of those was the need to refocus on competitiveness, which the Tánaiste alluded to in his remarks. There was also reference to the need to consider the demographic headwinds a decade from now. The Tánaiste referred in some of his earlier answers to the Future Forty report. From the perspective of the Irish Government looking out to this four- to five-year strategy, and perhaps the competitiveness and infrastructure piece is more in the remit of the Minister, Deputy Chambers, but in terms of the portfolio held by the Tánaiste, Deputy Harris, what would he say we, as a Government, can do in the short to medium term to try to address some of those challenges, particularly around the Future Forty report?

That is a very fair question. The Deputy is right that when we look at the Irish economy in the context of GDP, it comes under less factual or consequential scrutiny because of the unique situation of the Irish economy. Our reliance on corporation tax is something we have to address. If I think of a phrase to describe this plan, it is "fiscal buffers". We are absolutely investing more in public services, and the Minister, Deputy Chambers, is leading the reform agenda in that regard.

Alongside that, in this plan we are stating we will continue to run budget surpluses, continue to build up our long-term saving funds and will continue to another form of saving, invest in capital and invest in our infrastructure. Those three actions are a really important part of our preparation for some of the challenges that the Future Forty report identifies. That allows us to approach that from a position of strength.

From a finance point of view, we have to look at what we can do to continue to make this a competitive country in which to invest. We cannot just dine out on past successes. The world is more competitive for everything in investment. We are very fortunate IDA Ireland is continuing to bring in investments. In the most recent budget we made a change to the research and development tax credit, which is having a real impact. We have now published an R and D compass in terms of future policy changes we may consider in that area.

When I meet people investing in Ireland, as well as those in small businesses and large businesses, I hear childcare being mentioned as a policy priority, something that is shared across Government. It needs to be seen not just as a social policy but also a core economic action we can take to address some of the demographic and labour force challenges we face. When people read Future Forty, they have to stop misreading it. It is not a book that takes you from the beginning to the end. It is what happens if we sit on our hands and do nothing. Of course we are not going to do nothing. We are elected and paid to make policy changes to make policy decisions. However, it is instructive. We have about ten years to shape the next 40.

The Tánaiste referred to the fiscal buffers. That comes from the three pillars of the strategy. We are a good few months away from any budget but I know the officials from the Department are never too far away from that process. In terms of future funds, does he envisage a continuation of savings as we have done in the two future funds, the infrastructure and nature fund or the other? Will there be an increase in the number of funds the State is beginning to save in?

We do not have any plans to introduce any further funds. We have legislated for the two current funds. There is often an interesting debate as to whether we should put more into the funds, but from an overall balance sheet prospective, it needs to be seen as the three items together: running budget surpluses; money being placed in the funds; and investments in infrastructure. While we always reserve the right to consider all these things at budget time, that is the formula on which this plan is based from our perspective. It is a successful formula because it is building up buffers in three different ways.

Cuirim fáilte roimh na hAirí. My first question is for the Tánaiste. The plan is structured around the pillars of sustainability, resilience and readiness. How do these principles translate into measurable fiscal targets or decision rules in the annual budgetary process?

Gabhaim buíochas leis an Teachta for the question. I will take the resilience piece first. As I said in response to Deputy Devlin, different views and different perspectives are often put forward in relation to the economy, but one thing is absolutely certain. While the economy in a strong place, there are significant headwinds, vulnerabilities and demographic pressures, and we have to make sure we build up our resilience. Returning to Deputy O'Callaghan's point, we need to do it at a macro level and at a micro level. Having set them up, we need to continue to invest in the funds and grow them. We need to run the surpluses. We need to invest in infrastructure at pace. At a micro level we have to look at the actions we can take to make our citizens feel more economically secure. How do we bridge the gap between a macro level of economic prosperity and people feeling secure in their lives? I look forward to exploring these with the committee nearer to budget time. Ideas like how we incentivise savings and investments are really important.

From a sustainability point of view, this is more for the Minister, Deputy Chambers. We need to continue to invest in public services but we need to do it at a sustainable level. We cannot just write a cheque to address every challenge that we face. It is easier to ask people to do more and do things differently at a time when we are spending more leaving them more resources as well.

Going back to the question Deputy Devlin asked, with significant headwinds with demographics, how do we plan an expenditure approach? The medium-term expenditure framework looks at demographic headwinds and how that will affect health policy, social protection and other areas. When that is matched with what is set out in Future Forty, the upside opportunity on digitalising public services and advancing digitalisation across the economy, it tends to mitigate some of that risk. What we are doing on infrastructure delivery particularly on digital public services, improving citizens interface with day-to-day services and also the opportunity to moderate health spending in the medium to long term when demand rises, the investment we are making on the transformation piece from a health policy perspective will make a difference to mitigate some of those risks and ultimately to build sustainability into expenditure policy where demands are going to rise with the shift in population here.

Page 12 of the report shows significant growth in public expenditure. The number is there but is categorised differently. I think it went from €83 billion in 2018 to €137 billion in 2025. That is significant growth. How do we ensure we get value for money for that increase in expenditure? Like the Minister said, we are just spending it and then it is a case of what do we have to show for it after.

I agree 100%. That is why in the overall allocation, there has been a big increase in capital spending within the proportion of what we are doing in the next five years to reprioritise towards capital infrastructure in the economy. We know that is critical for growth and prosperity. As the population increases, the demands on services increases. For example, the education budget is a significant portion. Our health spend has obviously significantly increased through and after the Covid pandemic and the inflationary impact of providing these day-to-day services. The same is true for social protection. Those are three of the main drivers in terms of overall spend. That is why we have changed the existing levels of service approach so that it is not a debate on the marginal additional allocation, but how to reform the existing base of spend to drive more efficiencies. The budget expenditure book from budget 2026 places as much emphasis on reform as on new measures or existing expenditure, so that we challenge Departments to get better value for money, better outputs and more efficiency the context of endless requests we get for more headcount in the public service or on new measures. We are challenging different Departments on the trade-offs they have to make in terms of new measures or additional whole-time equivalents in particular so that we will again drive more sustainability to increase spend.

There is a moderation plan. We are not increasing spending in the next five years as much we did in the last five.

Has there been a step change in how we spend our money away from more current spending to capital? Is there a different impact on how the Department models how that money is spent from a capital perspective? Spending on projects is a very different kind of expenditure. A lot of it can go to third parties, where more stereotypical spending occurs on wages, salaries and social protection. It is assumed that gets rebuilt back into the economy. Does the Department treat that the same from a modelling perspective into the future for the purpose of this plan?

The overall macro allocation is treated similarly. Different Departments manage the capital spend on what the project might be.

There is no difference in economic behaviour coming out of that spend or different Exchequer returns.

That is a modelling question more for the Department of Finance and how it treats it. I know it is having a positive impact on our economic growth. Our medium-term modelling is positively impacted by the increased capital expenditure. That is reflected in what the Department of Finance has published in the medium-term plan that will see the upside piece in terms of the additional capital expenditure.

We set out modelling work in the in the plan. The website shows what the impact of the additional allocation under capital spending would be. Typically, it would have a larger impact at a macroeconomic level than current spending. It boosts the supply side of the economy.

If we think about it, over time, economic development is a function of the amount of human and physical capital we have. Boosting physical capital clearly boosts the supply side of the economy. It is set out in our analysis.

I have one more question. The whole thing hanging over economic activity is corporation tax. Our corporation tax take from the since the late 2010s increased from €11 billion to €35 billion or €38 billion depending on the year. How do we decide how much of that should be put into current or capital expenditure and how much should be invested sovereign funds?

This is something we look at----

It is a crazy decision to have to make.

No, it is not. However, it is a very fair question. It is one we are constantly grappling with and that we should constantly grapple with. Roughly speaking, up to 50% of our corporation tax could be classified as windfall in nature. Therefore, what we have been endeavouring to do over the past number of years is to be less reliant on that for day-to-day spending and to put greater proportions of it into the long-term savings funds. We have increased the value of those funds. This year, the amount invested will rise from €16 billion to €23 billion. This will go right out to €40-odd billion or €50-odd billion in the years ahead. We will continue to run surpluses in order to create a buffer and to spend money on infrastructure. If it does end up not being recurrent, at least we will have public assets to show for it at the end of the process.

Box 4 on page 14 of the plan outlines various scenarios that show the reliance the Irish economy has on corporation tax. Having said that, we would rather be in the position of having corporation tax than not having it. This did not happen by accident. It happened because of the pro-enterprise policies we have pursued as a country over decades. That bit is often brushed over. It is why we have to continue with things like the research and development tax credit and the research and development compass. We also have to continue to be competitive in trying to continue to create corporation tax.

I will ask a couple of questions now. The Tánaiste, the Minister and their officials are very welcome.

I have a quick comment on the savings scheme. I compliment the Tánaiste on bringing that idea forward. Hopefully, it will come to fruition. In the context of there being a cost, I would look at it more as creating resilience in the economy and, ultimately, wealth for individuals. That would very much counterbalance whatever the minimal cost involved might be.

I welcome the reduction from 9% to 6% in expenditure over the past number of years. The percentage in that regard will vary, depending on economic and population growth. There may be little tweaks to it, and it could end up being less if our economy slows down a little. Equally, as the Minister, Deputy Chambers, alluded to earlier, we cannot automatically assume that every Department should get the same allocation as last year plus a percentage. The idea behind zero-based budgeting is that you justify what you are doing and what you are spending money on. People have to get into that way of thinking. I am sure the Department of Finance thinks that way. If a Department is going to get an increase, it must be related to outputs and there must be productivity gains as a result of more money being spent.

One hundred per cent. What we did as part of budget 2026 was to examine the existing base of spend and the trajectory of it within the year. We have also focused on having as much discussion and reform as possible. The Leas-Chathaoirleach is absolutely correct. That is a more sustainable way to manage expenditure increases.

We need to see more meat on the bones when it comes to reform and value for money. We also need to see real examples of where it applies.

I want to make a clear distinction between current and capital expenditure. There is clearly a huge difference between the two. Capital expenditure has increased at a higher rate than current expenditure. In the context of capital expenditure on rail, broadband and so on, there is a tangible return. It is completely different. When IFAC issues its statements, it does not make that distinction. It is a crucial distinction. Companies borrow to invest in equipment in order to feed income down the road. That is something that is massively different from paying for current expenditure or for increases in current expenditure. Obviously, we want bang for our buck in respect of capital expenditure. However, controlling increases in current expenditure is crucial.

Absolutely. There is a 16% increase in capital expenditure in 2026. For current expenditure, the figure stands at in or around 6%. If we take the two figures, it is essentially a double-digit increase. This is because we want to build and bridge the gap around infrastructure and the economy, which is, as the Tánaiste said, about 25% to 30% compared with our European peers.

Earlier, the Minister referred to "linking investments to improved outcomes". That would be very much a part of what he referred to just now.

On long-term investment, we do budgets year to year. I met representatives from Irish Rail last week. Irish Rail wants more long-term certainty when it comes to investment. Clearly, contracts are entered into in the context of ordering rail carriages. These would be three- or five-year contracts. I do not how we close the gap, but Irish Rail would like more certainty as regards a commitment that there will be money available. Obviously, the latter would be subject to the economy continuing at a reasonable level. Irish Rail wants more certainty in the context of its long-term investments and its building of relationships with suppliers. The idea here is that infrastructure suppliers could set up in Ireland safe in the knowledge that there is a five-, ten- or 20-year opportunity to invest. I am not sure where we stand in that regard. Are we giving Irish Rail the certainty that it desires?

We have sectoral investment plans published across government. Agencies or delivery bodies within different Departments fed into the sectoral investment plans, which set out the distribution of capital over five years. Of course, every agency and body wants more. Ultimately, we have a trajectory in the area of in transport that will give to an exponential increase. Nearly €1 in every €4 of capital spending will be for transport over the next five years. This will transform public transport and our road network in the years ahead. My mandate to these bodies is to get on with it and accelerate delivery. We all trying to drive better co-ordination and delivery of capital investment. There are a lot of projects that Irish Rail will be central to delivering. I refer, in particular, to the DART projects and other projects in this regard. We need to see those delivered in the period ahead.

If you ask any agency or body in any area of policy what it wants, it will say that it wants more. We would probably be in a position of exponential and unsustainable expenditure growth if we were to meet every demand out there. The Minister, Deputy O'Brien, has worked to have a sectoral investment plan which looks at realistic allocations with planning permissions and prioritising balanced regional development. Irish Rail will play an important role in the delivery of that. I get frustrated by public bodies just having a binary conversation in the context of getting more. Ultimately, it is about delivery and using the significant increases in capital - no matter who they are------

I would be the last person to give in to them in the context of their wish list.

I know that.

It is about certainty regarding existing projects that we are all committed to.

That is why we have the sectoral investment plans. The Department of Transport has profiled the capital it is going to receive over the next five years against the pipeline of projects that are there. We have tried to give more certainty, over a five-year trajectory, for capital investment than was the case in previous years, when there were long lists in the national development plan. The purpose of the sectoral investment plans is to give certainty with regard to the metro or some of the megaprojects relating to water infrastructure. The Government was to advance these projects such that there is a strength in the procurement and competitiveness around the process.

It is great to see a five-year plan. I would like to see more detail in that five years, and numbers rather than percentages. We should be looking a generation ahead. For example, Future Forty looks 40 years ahead. Pensions and health costs are going to increase. If we start looking at it now, we might be able to say that people may be able to work longer without suffering a reduction in their pensions or lump sums. They could work past 65 or 70 years of age. In the context of healthcare, we could use AI more in order to reduce costs down the road. It is not all negative; it can be positive as well. If we start looking at what Ireland will look like 20 or 30 years from now, we can start planning and making incremental changes rather than waiting to be hit by intermittent shocks in five, ten or 15 years’ time.

We are never going to get it totally right. We will never get the numbers right but if we plug in numbers to anything, it starts telling us things. I would love to see that kind of future.

I actually fully agree with you, Chairman. In fairness to the Irish Civil Service and my colleagues in the Department, for all of us, regardless of our political persuasion or whether we are in government or in opposition, the Civil Service has done a really good job in trying to scenario plan what Ireland might look like by 2040. It is imperfect because-----

It is impossible.

It is as perfect as it can be. I do not mean to be rude but it has to be imperfect in terms of trying to predict what the country is going to be like in 2040 given that we are wondering where the world is now compared to where it was four days ago. It is a really honest effort to try to put thousands of various scenarios into the field. What is very clear is that the Ireland of 2040, on a no-policy-change basis, is going to be very different from a demographic point of view, among many other areas. We, as policymakers, will not be able to say in the future that we did not know. It is all there. The question for all of us is how we want to shape, interfere with or mould that. That is the first thing and it is the antidote to short termism that we now have this document. The challenge for all of us, and we are having this conversation in government and the Oireachtas, is to figure out how we embed that longer term thinking in our planning. What is clear from this is that technology and AI, among other things, are going to be a major part of any solution, and they have to be. How we use technology to disrupt some of those challenges is one issue. Another issue is that the demographic profile of this country, from an age perspective as well as many other perspectives, is going to change significantly too.

I apologise for having to slip out earlier. There was another meeting that clashed with this one. First, I thank both Ministers and their officials for coming before the committee. It is very helpful for us. I will start off with what our job is as a committee. As is clear from our name, our job is to scrutinise the budget. We scrutinise it in advance and we scrutinise it afterwards. I am sure other colleagues have mentioned the existing level of service, ELS, the changes there and how we might need to get more clarity on how exactly that will work, so that we can analyse it.

There is another issue and while I do not really mind who answers this question, I have framed it for the Tánaiste and Minister for Finance. It relates to the budget book itself and the fact that the sums just do not add up. I am sure the Minister is aware of it but the figures provided as expenditure aggregates should be the sum of the expenditure allocations for each Department, but they are not. If I take out a calculator, I see that the figures do not work out. There are lots of typos, errors and simple mistakes. For example, in the table detailing the reconciliation of the 2026 expenditure ceiling for the Department of justice, there are two categories labelled "other". I am not here to drag the Minister over the coals in relation to this. That is the way it was. We have just had that and it is just a factual thing. The issue for me is the situation going forward. Since the Tánaiste has become Minister for Finance, I assume he has become aware - or he probably saw it on the day that it was published, as I did - that there were mistakes. I am not even asking him to explain the mistakes or anything like that. What I am asking is whether the Department will be providing corrections. If not, can we just make sure that this does not happen again next year? When someone like me is sitting down on budget day and trying to analyse what is happening, it tends to prove impossible when there are simple mistakes like that. Again, mistakes happen and I am not trying to drag the Minister over the coals on this but I would like a commitment that this will not happen again and that next year the sums will add up. That just makes it easier for us all, especially in this committee.

First, while a lot of this is on the spending side in the individual Departments and their returns, I want to approach this conversation in the same spirit in which the Deputy has approached it in terms of wanting to work constructively. As I have said in the Dáil, I genuinely believe that the more information we can provide to the Oireachtas, the better we can all do our jobs. I fully agree with that. In relation to individual Department's spending ceilings and individual-----

The issue is that if we take out the budget book and a calculator, which we have obviously done because that is our job, it just does not add up. I ask the Department to make sure that is rectified for next year. I know that mistakes happen. Everybody makes mistakes. It is just to make sure that it does not happen continuously and that it is picked up on.

My next question is for the Minister, Deputy Chambers. I ask him to provide a note for the committee on the progress made by the National Shared Services Office, NSSO, in recovering overpayments in 32 legacy cases due to errors in education and training board payments to retirees dating back 15 years. I would be grateful if the Minister would provide us with a note on that.

I also have a question for the Minister on the overpayment of Ministers. I was really pleased to hear the Minister say that all current Ministers are now on repayment plans or have dealt with their repayments. Does the Minister know whether all former Ministers have either paid any money owed or set up repayment plans?

What I am aware of is that all current Ministers and Ministers of State have either repaid-----

Did the Minister say current?

Yes, current Ministers and Ministers of State are either in repayment plans or have repaid whatever was owed. To be clear, moneys were owed through no fault of their own, as I have said previously. In relation to former Ministers and Ministers of State, I will have to get more details from the Department. My understanding of the latest position is that the majority had repaid or were in a repayment plan-----

There are some-----

-----but not all of them. I get the aggregate information so I do not have the details. I said previously, either here or through parliamentary questions, that not all cases had concluded. However, I think those individuals were informed later than the current cohort. We will provide a written note to the Deputy on that. As I said, I have been transparent about it from the outset.

That is great. That is the best way. I thank the Minister for that.

My next question relates to the climate fines. Obviously, we are talking here about moneys going forward. The Minister, Deputy Chambers, recently disbanded the climate division within his Department and the Minister for climate, Deputy O'Brien, has admitted that the Government has chosen not to deliver on its climate pledges and will, therefore, have to pay up to €26 billion in fines to the EU. Obviously that is not financially sustainable. We are talking about huge sums of taxpayers' money being paid in fines. I invite the Ministers to clarify exactly how much the Departments are forecasting these fines to be and how they might fit into our medium-term framework.

I will start by clarifying that we established a new infrastructure division and within that, we have a specific team focused on climate policy. That team oversees policies from the Department of climate and energy. The wider piece here is ultimately to deliver the infrastructure to build a low carbon future. This is critical to ensuring that we reduce our overall emissions profile. There has been a bit of spin around that but, ultimately, the climate unit is still in place. The team still exists but is just not labelled as a division. That is the factual position. I will let the Tánaiste come in on the fines but I will just say that there is not an agreed number as to what those fines might be. That still has to be discussed at a European level. This Government, uniquely across economies, has managed to continue to grow our economy, increase our population and actually reduce our emissions profile. We want to make further progress on that in the time ahead.

There must be some forecasting.

About half of the member states are well behind on their targets and there is no agreement at a European level as to how such fines will actually even be levied. I do not want to cut across conversations that are going to take place at a European level but I know the conversation is already moving on to 2040 targets. Europe as a whole is going to have to address this issue because it is not sustainable for any member state. Ireland is in a strong economic position relative to other member states but it is not sustainable for us, or for them, to be paying over millions or billions of euro in fines.

Yes, but I assume the Department has done some forecasting on what fines could be payable.

That would not fall to my Department to do. I do not have any forecasting available to me now but I will see if there is any available in the Department of climate.

I am just trying to help.

To try to be helpful, when I asked the same question a couple of weeks ago, the Climate Change Advisory Council could not give exact figures. It said that in about a year's time there would be more information and it would be in a better position to make an estimate.

Okay. I thank the Chair.

To be clear, we do not have any forecasting in relation to fines.

Okay. Gabhaim buíochas leis an Aire.

I thank the Ministers again for their appearance and responses. On the annual progress report submitted every spring, will each Department have to feed into that or is it led by the Department of Finance?

It is done by us with input from colleagues in the Department of Public Expenditure, Infrastructure, Public Service Reform and Digitalisation. It is due to be completed around the end of this month.

End of March.

We will have it in March. Legally, we have until the end of April but we expect to have it done by the end of March.

Okay. On the Minister, Deputy Chambers's portfolio, the infrastructural division is up and running and much needed. What would he identify as the top priorities for this particular year for that division in his Department?

The legislative underpinning for accelerating critical infrastructure is hugely important, as is the work of the regulatory simplification unit to rebalance some of the layers of regulation which do not promote delivery. Those are two critical areas which we are advancing. The 30 reforms we set out in the action plan all have a cumulative impact on cutting time and driving delivery. There is wide focus across implementing those across 2026.

I refer to the Minister's opening remarks here. Each Department must adhere to ceilings. There is robust internal oversight but then there are risk management arrangements and avoidance of in-year policy decisions. What reforms will each Department have to undertake? There is existing internal audit controls, etc., but are there other layers that have to be implemented now in each Department to adhere to this? If those Departments do not adhere to those ceilings, are penalties envisaged? How will that be reigned in?

The first issue is in-year spending decisions, of which, over a series of years, there were too many. In many instances it was the response of the Government in a period of crisis, but for sustainable budgetary management they have to be avoided. What we are doing is reforming public financial procedures. We have strengthened Vote management, Vote by Vote or Department by Department. Ultimately, if there are significant overruns or risks of that in one Department, it will impact on everybody else and will impact on budget 2027. There is collective responsibility but there is also collective consequences from expenditure excess. That is the outworking of the medium-term fiscal and structural plan that there is a collective bind. We do not have an endless amount to allocate. We have a fixed amount. That is the nature of sustainable budgeting and what we have agreed in the medium-term fiscal and structural plan. We have made that clear to all our colleagues.

Looking at the budget book we published, we are as focused on reform as we are on overall expenditure. We have clear guidelines in terms of existing public financial procedures and Vote management which happens within my Department. The Minister for Finance and I, when we were being asked at respective press conferences, said that if pressures emerge, that significantly limits the ability to do what more people want us to do in budget 2027, so it is in everyone's interest across government to adhere to expenditure management. Ultimately, when there is discipline on spending, that will yield most outputs in terms of the programme for Government.

Generally it is towards the end of the year where an additional Vote may be required for a Department if it is needed. Given the collective impact it would have across government, how will it be communicated in Departments that there is a budget and an additional budget requirement for a specific Department? If one Department is keeping within its parameters and another is not, then that has an impact. How is that communicated? This is relatively new.

We assess it month by month around the rate of expenditure increase within Departments versus what they are allocated or projected to spend, but obviously we get a good view of that on a month-by-month basis around where potential risks are emerging. Ultimately, there is a natural consequence to significantly reducing an allocation in the following year. There are collective consequences to that in the context of how we manage a multi-year budget process. Last year we took Further Revised Estimates earlier in the year because of decisions that were made so that there was clear indication of impacts. A lot of that related to capital. We sought to correct that and how we manage the national development plan and prioritising it in certain areas.

Thank you.

I thank the Ministers for their time so far. I have a few specific questions drawing on some of the issues raised. Deputy Guirke raised RRDF funding. I was typing a question about URDF funding a second before. Have there been questions from the Department of housing on any future URDF funding that might be coming out?

The Minister, Deputy Browne, is due to set out the public position on this shortly. The URDF was discussed by the Government today.

It is as if I got a whisper.

He will set out the criteria in relation to the capital being provided around URDF. He will set out the detail around that shortly.

It was something I had not heard and I was thinking about it. The research and development tax credit was mentioned. It is brilliant. As someone close to Intel - it is a five-minute walk from my house - I know all too well its critical importance to our infrastructure. Is there a discussion on how we can make it more accessible to smaller, indigenous companies? We see a lot more Irish companies going down the research and development track. I am thinking of start-ups and smaller companies in general to which we could make it more accessible because it is a complex tax by nature. This is about the process around it.

Yes, is the short answer. It is interesting. The biggest number of recipients of the research and development tax credit are indigenously owned small and medium enterprises. Obviously the largest amount might be drawn down by larger companies but we are now seeing more and more Irish-owned, indigenous SME-type companies availing of it. I can get a note to the committee on that. We also need to embed greater knowledge of this through the local enterprise offices and others. Part of the work being done by the Minister, Deputy Burke, and the Minister of State, Deputy Dillon, on the support structures we have in place for SMEs is on increasing awareness of and accessibility to the research and development tax credit because it is there for companies of a variety of sizes. I do not have the data to hand but we are seeing more and more SMEs availing of it. The research and development tax compass indicates the future improvements we want to make to it.

I met Intel recently on the west coast of the United States. It is a company that remains really committed to Kildare as well. It is a real success story.

I thank the Minister. The critical infrastructure Bill is quite timely. That will be coming through soon. Which committee will it go through? Will it be finance or the infrastructure committee?

I will check the Standing Orders on this but I understand that the legislative remit of the Department is with the committee on finance, public expenditure and reform, and Taoiseach. We are clarifying that today before we send the communication around. We will seeking the committee's support for a waiver of pre-legislative scrutiny so we can drive the Bill through very soon.

If there is anything we can do at the infrastructure committee, to put my other hat on, we will be only too happy to help.

I appreciate that.

I echo what Deputy Timmins said about the savings scheme, and Deputy O'Callaghan raised it as well. It is something we have discussed. I can only see the positive in it. It is one thing having strong economic activity but we need to ensure that individuals and families feel the benefit as well as the structural benefit and confidence that will give them too.

I am very aware of the billions that have built up in individuals' cash reserves, as was mentioned. We need to ensure those funds get to work for them. We should also look at how we can get them to work for Irish companies and leverage them for Irish economic activity rather than just drawing a return from an international firm. I know it is going to be complex. That is why it has to be teased out. However, I do fully welcome and see the need for it. It is a great idea.

This is something we really have to get right. People ask what the cost will be, and that is a legitimate question. We will answer that on budget day with regard to whatever proposals we bring forward. The cost of not doing this is really significant for middle-income and middle-Ireland families, people who are doing their best to squirrel away a few bob and who are saving. I met a grandmother in a credit union in Cork the other day. She comes in every week and puts a fiver in the credit union accounts of each of her five grandchildren. We could all do with a granny like that. She does that every single week. She is trying to do her best for them. There are people like that right across the country. They are trying to prepare for their own future and to be more resilient. They are trying to do the right thing. At the moment, our system is not supporting them. That is not just an Irish view; it is a Europe-wide view. We have to incentivise savings and investments. The only good news about not being the first to do this is that we can learn from others. We can look at what has been done in the UK, Sweden, Canada, Japan and other countries and then bring forwards proposals. We are all ears on this. We want to listen to people. We want to engage with the institutions, the regulators and the people of Ireland as to how we can make this work. The Minister of State, Deputy Troy, and I intend to use the window between now and the budget to engage widely on this.

Táim ag iarraidh díriú isteach ar the medium-term fiscal and structural plan in the budget. I know we have the three key pillars of sustainability. In relation to infrastructure in Ireland, may I focus in on the energy system? Is that allowed? With regard to the investment in marshalling ports, has there been any update from the Department on the issue of the red tape that is holding back a lot of the investment in our ports? We saw an investment of €90 million in the Port of Cork. I know from the answers to parliamentary questions that the Department is examining this issue. We need to be serious about offshore renewable energy, particularly in light of the shift in US economic policy and the continued competitiveness pressures on Europe from China. It was great to hear the Minister say he is independent and ambitious. Is he joining the Independents? We are an outward-facing country and we must respond. We need ORE and grid capacity. Is there a clear plan to allow more investment in our ports for the development of ORE? I learned in college about how we threw away our oil and gas. There is now huge potential to benefit the Irish people by using our seabed, our ORE, wave technology, wind, private wire legislation - which I am delighted to see progressing - and long-duration green hydrogen. Has there been any update to ports policy?

I will take a step back to talk about our transport and energy sectors. The Deputy will be aware that €18 billion is to be invested in the next five years through PR6. This is a trebling of investment compared to the last five. That is all because this Government wants to prioritise building a new grid and embracing the opportunities provided by renewable energy that the Deputy has mentioned. We discussed the capital investment profile in transport earlier, which will come to €24 billion over the next five years. All of that is to underpin a transformation of the State's transport system.

The Minister, Deputy O'Brien, and the Minister of State, Deputy Canney, are finalising a national ports policy. There has been significant work and consultation on this over the last two years. It was actually commencing when I was a Minister of State in that Department. We are seeking to progress the policy when that concludes. The previous national ports policy was agreed in 2013 by the then Minister, Leo Varadkar. The economy is now very different and there are different opportunities for our ports as nodes of growth in the context of renewable energy, as the Deputy has referred to. That will be reflected in what Government agrees but it has yet to come before us. We obviously welcome all input in that regard.

I really appreciate that response. I look forward to the Minister of State, Deputy Canney, and the Minister, Deputy O'Brien, publishing that policy. I will follow up on one of the things the Minister just mentioned. I refer to the current global situation. I have mentioned previously that during the Second World War, Dev, who was intend on reducing the amount of coal being used in Ireland, was nearly forced by Churchill to end our neutrality. We do not want another country to have power over us. To be as independent, ambitious and outward-facing a country as we can be, energy independence is huge. I know the Minister agrees with that. The progress of the private wires legislation is frustrating, particularly as I have been here for 14 months and have been constantly pushing it. I know things take time. There is something I would love the Minister to bring back to his Department or to the Cabinet, namely the issue of plug-in solar. It is very simple. It is especially relevant when hundreds of thousands of people are in arrears. I will leave it there.

It would be brilliant if the Minister had anything to say about how his Department will bring in the infrastructure Bill and how it will prioritise renewable energy. I have heard him say before that he foresees the future of Ireland's economy involving energy parks, which other Ministers have also mentioned. That is definitely true. One in 50 jobs is directly or indirectly linked to data centres in Ireland. With the growth of AI, that figure will just continue to rise. I would really appreciate it if that could be brought in or if the Minister could give an update on it.

The Minister, Deputy O'Brien, has published the policy on private wires the Deputy has strongly advocated for. He is currently developing legislation to underpin that. Facilitating developer-led infrastructure in the energy and water sectors is something that was included in our infrastructure report. Today, Government advanced our commitment in respect of developer-led infrastructure in water services to increase the supply of housing. We have reflected the need to build massive headroom in the energy sector to embrace the digital infrastructure and AI future the Deputy has referenced by trebling investment over the next five years so that there is a pipeline of supply for energy, including renewable energy. The Minister, Deputy Burke, has done extensive work on the green energy parks. That is something we want to see advanced in the 2030s.

I have one brief question. It is more for the Minister, Deputy Chambers, and his officials. It is on one of the notes, which discusses the accuracy of budget information, budgetary forecasting and related issues. It is a very simple question but there is no easy answer to it. With regard to the starting point for next year's budget, is it based on the previous year's budget, the expected outcomes for the current year or a combination of both?

There is a reconciliation table on page 12 of this year's expenditure report that basically tells you how we get to the starting point for the budget. It sets out the 2025 Estimates, takes off temporary measures, includes decisions taken in-year at the time of the summer economic statement and then provides the position we start from. From there, it sets out very clearly the different expenditure categories we add to that to get to the overall expenditure ceiling for 2026 of €117.8 billion. That obviously includes the capital allocation of €19.1 billion. Current expenditure is broken down to reflect the pay deal-related costs for this year, the costs of other decisions taken in 2025 and the costs of demographic drivers in areas like pensions, social welfare and childcare places. There is a lot of information in that table that explains how we build the budget.

It is based on the most up-to-date information-----

Yes, absolutely.

-----at the end of September.

To follow up on that, we publish a variety of information throughout the year to give the budget transparency. We have a series of publications. The expenditure report was mentioned earlier but we publish performance information in May. Last year, we published the medium-term expenditure framework, which tries to set up what has happened in the past and the future drivers of expenditure. We then have the expenditure report, which is followed up by Revised Estimates, which, again, provide detailed information at subhead level around outputs associated with each expenditure line. We are happy to provide any more information but a suite of information is published in a series of documents throughout the year as part of a whole-of-year budget process.

All the information the Department has at the end of September, including information on overruns that happened in the year up to then, is built into the budget that is presented to the Dáil in early October.

It would be considered as part of the negotiations when developing the Estimate. The allocation to each Department is the outcome of the negotiations over that period. All the information that is available to us at that time is reflected in that process.

What I am really asking is whether the Department takes a conservative view based on the past year or is it based on absolutely all of the information it has at that date so that it can make the budget for 2026, or 2027 as it will be, as accurate as possible, which I think is a better idea. That would prevent in-built under-estimates.

We absolutely do not do the former. There is also a need to challenge excessive expenditure or bad behaviour in certain Departments or agencies. That should be challenged in the context of requests for new spending. That is all considered as we give thought to trade-offs. If there is a higher-----

There may be a case for reducing expenditure in certain areas.

If there is a higher trajectory of expenditure, the opportunity to take on new measures should be limited where there has been bad behaviour or financial mismanagement on the part of particular Departments.

Bad behaviour does not get rewarded.

It should not. Ultimately, Accounting Officers need to be accountable for management within public financial procedures. They are there to manage their budgets. We will ultimately deliver more if they do.

I have one or two very brief questions. For the first time, the Tánaiste, Deputy Harris, has the opportunity to set out his budget priorities. I would be interested to know what will guide or direct him in that. The well-being framework sets out a range of priorities regarding the things we value not necessarily as an economy, but as a society, which is more important. It takes into account everything from housing to the quality of education, the environment and so on. How does the Tánaiste see that framework influencing his priorities as he puts together the forthcoming budget? For example, one aspect of the well-being framework is educational attainment. Typically, the environment in which education takes place has an influence on the quality of education and educational attainment. We would love to see loads of schools, even more than are on the list, being built. I am interested in knowing how the Tánaiste sees the likes of the well-being framework influencing his priorities and where we will see its fingerprints on the budget later this year.

I am very much looking forward to working on the budgetary process with the Minister, Deputy Chambers, in the months ahead as this Government delivers its second of five budgets. Without pre-empting the budget, I have some initial thoughts. A number of important decisions, which I think were the right decisions, had to be taken as part of last year's budget. A decision had to be taken to make significant investment in public services. The Minister did that in consultation with colleagues. I think of the area of disability in particular, where we saw a significant and much needed increase in the base level of funding for disability services. Decisions were made on a variety of other areas of public services as well. We also had to take a number of decisions on the tax side that are looking even better by the day, to be quite frank about it. These decisions were intended to stimulate housing supply and to protect jobs. I am thankful we took the decision to keep the lower rate of VAT on people's energy bills. Those decisions have been taken now. I think they were the right decisions but, from a tax point of view, we now have to get back into the normal rhythm of a tax package. The detail of that is for another day. Both parties in the Government we came together to form gave commitments to making sure that work pays. While we are in a very volatile period, subject to the economy continuing to grow, I would like to see progress on that not just in this coming budget but also in the rest of the budgets over the lifetime of this Government.

I am glad the Deputy brought up the well-being framework. That is really important. We do judge the success of any society not just on the basis of a load of economic metrics but also on the basis of well-being. As the Deputy will know, we now include that in the distributional analysis of our budget and in the budget day material, which is a positive development. From that well-being point of view, we should be pleased that we put a focus on the whole area of child poverty this year. We recognised that it is not just the job of any one Department. It is not just a job for the Minister for Social Protection, Deputy Calleary, or for the Minister for children, Deputy Foley. We all need to come together and ask what we can do to improve the lot of children and to tackle child poverty. There will be an analysis out shortly but I really think the measures we have taken in this budget from a well-being point of view will have made an impact on child poverty this year. The programme for Government contains a commitment to delivering progressive budgets. The well-being framework is a part of that, as is the distributional material we publish in the budget tables.

On schools more generally, there is a lot of work going on. This country is very good at building schools. We have built a lot of schools over the past decade. The demographics dictate that we need to build more. We all know of certain school building projects that are in need of further attention. There has been a significant uplift in capital funding for education, but, as we have consistently said since the education capital plan was published, it will not be the final word. This Government will be able to make further capital allocations during its lifetime. Without pre-empting any discussions, I have no doubt that education and schools will continue to be priorities for us.

There has been an increase of 50%. The base position for education was €1 billion per year in 2020, which is €5 billion over five years. It is now €7.5 billion. There is significant scope for the Department of education to efficiently prioritise its pipeline. As a result of the capital uplift it has received in this capital development plan, there will be a lot more schools built and a lot more special education classes provided. Notwithstanding the narrative around it in the last week or two in particular, this Government is investing significantly in education both in terms of staffing and of the pipeline of new schools, new special classes and so much more. It is important to set out that factual context with regard to the €7.5 billion being invested over this capital cycle. That sometimes gets ignored in the broader debate.

I am very conscious of the fact that people only have one childhood. Over time, opportunities are missed. If there is a plan to build a school and a large number of children in the community have passed through by the time we get to it, an opportunity has been totally missed. There is only one chance in a lifetime. I just want to make sure that schools are built when they are needed or ahead of that need. That need is there at second level in many of the communities around me, such as Coachford, Baile Bhuirne, Macroom and Ballincollig. That pressure is there and it continues to grow. We need to see those school buildings provided in a timely manner.

There are great sports clubs in some of those communities, including in Coachford and Ballincollig. The GAA club in Ballincollig is doing exceptionally well.

That concludes our session. I thank the Tánaiste, the Minister, Deputy Chambers, and all of the officials for attending.